What is cold storage ratio?

The share of customer assets an exchange keeps in offline storage rather than in wallets connected to the internet.

A high ratio limits what a breach of the live systems can take, which is why it appears in security disclosures and marketing alike. The figure alone proves very little. It is self-reported, measured at a moment, and says nothing about who controls the keys or whether customer assets are segregated from the company's own.

The important limitation is that the ratio describes assets and ignores liabilities. An exchange can hold 98 percent of what it has offline and still owe customers far more than it holds.

How it works

An exchange splits customer assets between hot wallets, which are connected to its systems and fund withdrawals automatically, and cold storage, which requires manual and usually multi-party action to move. The ratio is cold divided by the total.

Running a higher ratio costs the exchange convenience. Withdrawals that exceed the hot wallet float must wait for a manual sweep from cold storage, which is why large withdrawals sometimes take hours at venues that hold very little hot.

Four questions turn the number into something useful:

1. Who verified it, and on what date. A self-published figure with no date is a claim, not a measurement.
2. How the keys are held. A single-signature cold wallet controlled by one person is not equivalent to a multi-party scheme with geographically separated shares.
3. Whether customer assets are segregated from the exchange's own treasury.
4. What the liabilities are. Reserves without a liability attestation cannot show solvency. See proof of liabilities.

RampAtlas treats claims of this kind as facts requiring a named source and a date, in line with our methodology.

Example

Illustrative. An exchange states it holds 95 percent of customer assets in cold storage. A breach of its hot systems can therefore take at most 5 percent, which on a 2 billion dollar book is 100 million dollars, enough to be fatal on its own. Separately, if that exchange owes customers 2.4 billion against 2 billion held, the 95 percent figure is entirely accurate and the exchange is still insolvent. The ratio and the shortfall are unrelated measurements.

Why it matters when you buy

Custody arrangements determine what survives a breach, and they are one of the inputs to how RampAtlas scores trust and security. A ratio is worth reading alongside a reserve attestation and the venue's incident history rather than on its own. The exchange pages record what each venue publishes, and proof of reserves explains what an attestation does and does not show.

Related terms

cold storage — the offline half of the split; hot wallet — the connected float that funds withdrawals; proof of reserves — the attestation that reports holdings; proof of liabilities — the missing half of most attestations; segregated accounts — whether customer assets are kept apart.

Questions

Is a higher ratio always better?

It reduces the maximum size of a hot wallet breach, which is real. It also tells you nothing about key management, segregation, or solvency, so a very high ratio at a venue with no reserve attestation is weaker evidence than a lower ratio at one with an audited attestation.

Who verifies the number?

Usually nobody outside the exchange. Some venues have the figure covered in an auditor's agreed-upon-procedures report, which is stronger, and many simply publish it on a security page with no date.

Does cold storage protect me if the exchange fails?

No. Cold storage protects against theft, not insolvency or bankruptcy. In a failure, whether customer assets are legally yours depends on custody structure and local law rather than on where the keys were kept.